When to stop for the day ?

Paulie_5

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First off, this is my first post on this forum, depite lurking for many months. Hello everybody - Please be gentle ... !

I've been day trading the Schatz for just over a year now and I've developed a strategy that seems to work nicely for me. I've got to the point now where I'm trying to maximise my profits. I just have one question ...

Do you stop when you reach a certain profit target for the day ?

Or do you continue trading your strategy within your trading hours, regardless of your p+l?

I can't help feeling if the opportunity is there, and the entry point ticks all the boxes of my strategy, then why not carry on trading ? However, on an apprenticeship I did, I was told to stop when I was nicely up for the day .....

Which do you do and why ?

Any advice much appreciated !

Paulie

(I tried to do a search for this, but couldn't find anything)
 
Assuming your strat is robust and should work at any time, you can - work at any time.

The mornings may be more favourable to your instrument in terms of the action they see.

The afternoons may be so, if you trade the DJ30 etc.

I am usually happy if i make say 50 pips in the morning.

If i feel good, i might work into the afternoon, and clear the tables. 2 days of this per week means i have made my weekly target inside 2 days.

Bottom line, for me is to make a tidy profit by executing correctly, day after day, trade after trade. Regardless of the time of day. If i do this well, the P/L takes care of itself and i am a happy rasta.
 
The key is to recognise what is happening to the price right now. Is it tradeable or not. If it is not tradeable, why is it not tradeable, and what would need to happen to make it tradeable again. This type of judgement takes lots of time and experience to acquire.

When things get really bad and price misbehves, it seems like it is doing the polar opposite of what it should be doing. But this can be identified early. Price may have retracted into a very tight consolidation pattern, with non-existent R:R potential for any entries, so you might wait for a breakout, and some sort of price expansion before you consider another entry.

Or, you might get entries that then retrace to your stop. Price might come back to your entry and into a big profit, that you do or do not profit from. Whether you do take this 2nd entry depends on the R:R potential that exists for profit.
 
"Personally I am far more inclined to trade with a lack of discipline when I'm up loads then when I'm down."

Hahahaahahaha

Also 10k a day? wtf. Give me money...
 
Rationally, it makes absolutely no sense to stop when you are winning - if the current conditions in the market suit your style, then make hay while the sun shines!! On the other hand, days when it's all going t!ts up are usually the best to take yourself out of the loop for a while

[of course, statistically speaking, ceteris paribus you should take as many legitimate trades as you can to increase your sample size. But traders are people, and to ignore what effects that has on results is pretty dumb IMO]

However, I would also mention the importance of having targets to work towards - it isn't really a good idea to say to yourself "I am going to sit here and trade until... well, I dunno". We all know one of the biggest trading skills is to keep your head and monitor yourself, it's a bloody mind game. So sure, when you are trading badly, stop because emotions kick in and that is generally bad for your PnL. Of course, the "mind game" side of the thing works the other way too - goal setting and targets are known to improve realised results, it is no good trading ad infinitum.

So, stop when you are down by x (and compound this up... for instance 3 bad trades in a row -> stop for day... 3 losing days in a row -> take the rest of the week off.. etc..), but also have a program of goals on the upside - eg. yy points per day (which should be >>> what you actually need on average), if that then 3 more trades for zz points, and so on (like pyramiding). It is also a good idea to set yourelf 'watermark' loss levels, say if you meet your target, continue to trade but stop if you give back a %, or the gross sum of all your losses > some other level...

on a similar note, this makes interesting (and pertinant) reading...

StockCentral :: Blog - Don't Invest Like a Manhattan Taxi Driver in the Rain
 
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Thanks very much for taking the time to reply guys ...

GJ - I only ever trade when my market is liquid, pretty much 7am-12pm , break for lunch, 2pm -4.30pm, so tiredness doesn't really come into it, although something I hadn't considered to be honest. You make a good point, "If you're down a huge chunk you would certainly stop right? So why not when you're up?"

I guess as Honeymonster says (and particularly relevant to a newbie as myself), it's better just to trade to execute correctly and p+l and it will take care of itself....
 
"So, stop when you are down by x (and compound this up... for instance 3 bad trades in a row -> stop for day... 3 losing days in a row -> take the rest of the week off.. etc..), but also have a program of goals on the upside - eg. yy points per day (which should be >>> what you actually need on average), if that then 3 more trades for zz points, and so on (like pyramiding). It is also a good idea to set yourelf 'watermark' loss levels, say if you meet your target, continue to trade but stop if you give back a %, or the gross sum of all your losses > some other level..."

Disciplined. I always feel like I need to make losses back asap. Rushed trades hardly ever play out well.

Hoping I'll grow up a lot more through trading.
 
only thing I'd add is tiredness, following the trends on a certain indice/market for a long period of time can be profitable but monotonous. As folk are fond of saying the market will always be there and opportunities will abound next time if you're in the right frame of mind which you mightn't be if your shagged.:)
 
I 'try' to be a purely mechanical trader.

I have a set of rules that I stick to rigidly and I've been developing my discipline over the last year. Everything seems to work fine. I stick religiously to stops, both stops for each individual trades and daily stops. I can even sit there for an entire day and not put 1 trade on if my criteria for entering a trade aren't met... but I struggle most with executing trades when I'm nicely up. I feel like my p+l suffers a bit as a result. Sometimes I look back after a day's trading and look at missed opportunities because I was trying to protect my profits. It kills me! But I still have a mental block in the same position the next time I'm nicely up ... You say "Emotion certainly shouldn't play a part any longer" ... Well , I trust my strategy and it works - but with my p+l ... well I'm human !

MrGecko - I like the idea of having a strategy for my p+l too. If I've got a set of rules to stick by with regard my p+l (over and above just having a daily stop), then I reckon that'll give me something to work with.

Great suggestions everyone, thanks.
 
Yes, in theory. There is only a very small element of subjectivity in my trading ... but enough to require a human to execute the trades rather than a computer ....
 
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